USD/JPY Forecast – US Dollar Recovers During Tuesday’s Session

USD/JPY Forecast Video for 15.03.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has rallied a bit during the trading session on Tuesday to show signs of stability against the Japanese yen. After all, we had a couple of days’ worth of significant selling pressure, so this is the first step in perhaps turning things back around. It’s worth noting that the 200-Day EMA and the 50-Day EMA are sitting just above, so that could offer a little bit of resistance. If we can break above those, then it would be a very good sign.

Keep in mind that the Bank of Japan will continue to pay close attention to the 10 year yield, as they have a limit of 50 basis points on that pond. In order to make that happen, they will have to print more yen to buy more bonds every time rates strengthen, in order to buy those bonds. This will flood the currency market with yen, thereby disrupting the supply/demand equation. As long as that will be a threat, there’s a very high chance that perhaps this market is getting ready to turn around and go much higher. Because of this, the market will continue to be very sensitive to interest rates around the world, because as they strengthen, that puts a significant amount of downward pressure on the value of the Japanese currency.

Underneath, the ¥132.50 level should be support, but if we were to break down below there is likely that we could go down to the ¥130 level. The market will more likely than not going to be a situation where you have a lot of noisy behavior, but I still think at this point in time you have to look at this through the prism of interest-rate situational awareness. At this point, it looks as if the ¥137.50 level is going to offer a significant amount of resistance as a ceiling, so therefore anything above there should send this market much higher, perhaps opening up the possibility of continuing the overall uptrend that we had going on during last year. As things stand currently, I do not have any interest whatsoever in trying to short this market, despite the fact that the last couple of days have been somewhat difficult on the greenback.

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